“2020 began very successfully for EstateGuru as we doubled both our investor base and loan amounts compared to the first quarter of 2019. This excellent start to the year gives us extra energy and motivation to go through the current choppy times and become stronger and more fit for the future after the crisis. I truly believe that our business model is a solution perfectly made for exactly the kind of a new world we are entering. That’s why EstateGuru was created in the first place — to have the business model which is designed to keep going through all times”, commented Marek Pärtel, EstateGuru’s Co-Founder and CEO.
8092 new investors joined EstateGuru during Q1 2020 compared to 3927 during Q1 2019. The biggest number of new investors came from Germany – 1842 — and during the first quarter, the German investor community of 11 290 surpassed the Estonian community of 11 113 which had previously been the largest group on the EstateGuru platform since the very beginning in 2014. The next ones to follow are Lithuanians, Latvians, Italians, Spanish, Austrians and investors from 99 other countries. Our investors earned €2,9 M of interest during the first quarter in 2020 versus €1,8 M in Q1 2019. 204 projects were financed in the amount of €27,2M during Q1 2020 compared to 89 projects in the amount of €13,5M in Q1 2019.
“The first quarter of 2020 marks another historical milestone for us, as EstateGuru financed its first project in Germany. This move was part of our tested and proven expansion model. We are close to finalising all the preparatory work in order to establish our local subsidiary and operations in Germany. Our aim is to be fully compliant with regulations for running local daily business operations in the country during the upcoming months”, added Pärtel.
During the first quarter, we also witnessed the first scams emerging in the industry. Being a market leader gives us extra responsibility to work closely with regulators in all our operating countries to make sure that the sector is healthy and viable. EstateGuru invites all the market participants to make extra efforts for transparency and openness — let’s publish annual reports and let’s audit them. All platforms should also publish regular portfolio overviews and different statistics regarding the platform. EstateGuru’s annual report is ready and it will be sent over to auditors at EY (part of Ernst&Young). The audited annual report will be published in June.
As we operate in different European countries and continue to enter new markets, EstateGuru considers contributing to the fight against money laundering a priority business task. The application of Anti Money Laundering (AML) measures is an unavoidable part of being a sustainable crowdfunding platform, creating trust and serving clients from different parts of the world.
The current crisis brought on by CoVid-19 will accelerate the inevitable digital transformation of real estate. Agility is a priority now more than ever. Crowdfunding, born as a result of the last major financial crisis, could play an essential role in easing the current situation by helping companies to raise much-needed financing. One of the challenges of this crisis is not an absence of capital per se, but the inability to provide or access funding fast mostly due to execution risk, e.g. face-to-face interactions with bankers, public notaries, etc. Crowdfunding is the best solution to this problem as it can be executed online in a manner which keeps the public safe. Governments and EU institutions could also help by channelling funding through crowdfunding platforms.
“The brilliant business results of the first quarter don’t make us strive any less, quite the opposite. Our priorities are very clear – to stay as conservative as we have always been in our credit decisions and to offer liquidity to as many SMEs as possible during these turbulent times while continuing to offer stable returns for our investors. We haven’t had any capital loss since 2014 and the average return rate of recovered loans has been 10,4%. We expect to see partial capital losses in some loan cases due to the economic situation this year but in case of proper diversification of the portfolio, it would not affect the overall performance of investment returns significantly. We’re continuing our journey to become the leading property lending and property-backed investments platform in Europe in terms of quality, stability and technological innovation through economical cycles”, summed up Pärtel.